Back to the Future: Argentina Unravels,A comprehensive look how the government of Cristina Fernández de Kirchner, through corruption, transnational organized crime, warming ties to Iran, failed economic policies and cronyism, are moving Argentina to pariah status.February 28, 2013

Iran in the Western Hemisphere,Douglas Farah Testimony before the House Committee on Foreign Affairs, Subcommittees on the Western Hemisphere; The Middle East; and Terrorism, Nonproliferation and TradeOctober 27, 2009

In 1998, following the al Qaeda attacks on the U.S. Embassies in Nairobi, Kenya and
Dar-es-Salaam, Tanzania, the Clinton administration froze some $240 million in ../assets
belonging to Afghanistan's Taliban government and Osama bin Laden, the rogue regime's
guest. That caught both the Taliban and al Qaeda by surprise because they apparently
did not realize the money, mostly held as gold reserves in the United States, could
be targeted. Because it was so costly a miscalculation and because al Qaeda
constantly reviews both successful and failed operations to find and correct their
own vulnerabilities, a far-reaching review of the terrorist financial structure was
undertaken.

Adapting to the U.S. response and determined not to be caught in the same position
again, al Qaeda began a systematic withdrawal of its funds from the formal banking
sector, where its ../assets were vulnerable and traceable. Instead, the decision was
made to begin shifting money into commodities that would hold their value over time.
Chief among these were diamonds and tanzanite.

Diamonds and tanzanite offered an additional advantage for terrorists. The
infrastructure needed to acquire and trade in the gemstones was easy to set up
because the commodities were available in states that exercise little control over
much of their national territory. Tanzanite is only found in a small corner of
Tanzania, where the government has virtually no presence. And the diamond trade al
Qaeda tapped into in West Africa was centered in Liberia, where the corrupt regime of
Charles Taylor also controlled diamonds mined by his allies in neighboring Sierra
Leone. In Sierra Leone the diamond fields were under the control of the notoriously
brutal rebels of the Revolutionary United Front (RUF). The RUF earned international
notoriety for its signature atrocities of hacking off the arms, legs and ears of
civilians, including children as young as 2 years old; mass rape; and the abduction
of thousands of children who were forced to become fighters.

Al Qaeda already had long-standing ties to the gemstone trade. Documents and
testimony presented during 2000 the trials of Wadih el Hage and Mohammed Sadeek Odeh
show that al Qaeda, even before the U.S. embassy bombings, was dealing extensively in
diamonds, tanzanite, amethyst, rubies and sapphires, mostly as money making ventures.
According the trial transcripts, senior al Qaeda leaders were deeply concerned about
the possibility that an al Qaeda operative was carrying a large quantity of stones
when he drowned while crossing a lake.

After the Embassy bombings, the use of gemstones accelerated rapidly, but with an
added purpose. Rather than being viewed solely as a business venture, gemstones, and
diamonds in particular, were used as a way to store the value of al Qaeda's financial
resources outside the formal financial sector. A premium was no longer placed on
turning a profit, but rather acquiring as many stones a possible with money that was
being siphoned out of banks and businesses.

The al Qaeda leadership, through Mohammed Ahmed Mohammed, one of its senior financial
operators, contacted an old al Qaeda friend who had fought with the mujahaddeen and
now ran most of the illicit or "blood diamond" trade for West Africa, Ibrahim Bah.
Bah is a Senegalese who trained in Libya under Moamar Gaddafi, then went to fight in
Afghanistan in early 1980s. After about two years there, he briefly returned to Libya
before joining Hezbollah fighters combating Israeli forces. Finally, he returned to
Libya in the late 1980s, just in time to train and become friends with the long list
of Libyan-backed leaders who would wreak havoc on West Africa: Charles Taylor of
Liberia; Foday Sankoh, founder of the RUF in neighboring Sierra Leone; Blaise
Compaore, now president of Burkina Faso, who assassinated his best friend, Thomas
Sankara, in order to assume the presidency.

The contacts between Bah and al Qaeda began in 1998, just weeks after the Embassy
bombing and continued until after 9/11.

But what is important and instructive are the conditions, ideal for terrorists, that
allowed the relationship to prosper. Bah had access to diamonds mined by the RUF,
among the most prized in the world. He was also a key player in Liberia, a corrupt
state that, while retaining the valuable trappings of nationhood, was, in fact, a
functioning criminal enterprise. Among the benefits accrued to the Taylor regime
despite its criminal status were the right to issue internationally-recognized
diplomatic passports, the ability to register aircraft and ships, control of the
formal entry points, and access to a central bank. Bah's close relationship with
Taylor and the Liberian security apparatus guaranteed that his guests, while wanted
as terrorists elsewhere in the world, could come and go unmolested to Monrovia. Armed
thugs from the presidential guard escorted Mohammed and later al Qaeda visitors to
and from the airport, allowing them to circumvent immigration formalities and
lessening the paper trail. As long as Taylor was apprised of the situation and was
able to take his percentage of each deal, neither Bah nor his guests had anything to
fear.

Bah also had access to the official state apparatus of neighboring Burkina Faso, due
to his long-standing personal and business relationships with president Blaise
Compaore. Compaore also had close ties to Taylor. Compaore and Burkina Faso offered a
valuable asset that Liberia, under an U.N.-mandated arms embargo, could not: the
ability to produce internationally-recognized end-user certificates for the purchase
of large quantities of weapons from around the world. For many years Bah, with
Compaore's knowledge and blessing, coordinated arms shipments for Taylor and the RUF
through Burkina Faso's capital, Ouagadougou.

Al Qaeda was not the only terrorist or criminal group to operate under the protection
of Taylor, Compaore and Bah. Victor Bout, one of the world's largest illicit weapons
dealers, registered his fleet of aircraft in Liberia because he could do so with no
questions asked and no inspections required. With those aircraft, he shipped tons of
weapons-including combat helicopters, surface-to-air missiles and anti-aircraft
guns--to Taylor and the RUF through Burkina Faso. At the same time, Bout was
supplying UNITA rebels in Angola and several sides of the civil war that was
shattering the Democratic Republic of Congo. He often accepted diamonds as payment
for his weapons.

There is an intriguing link between Bout and al Qaeda. U.S. and U.N. investigators
found that, while supplying African wars with weapons, Bout was also providing goods
and services to the Taliban and al Qaeda. From his base in the United Arab Emirates,
Bout and a partner, a member of the royal family, flew weapons, medicines and other
commodities to the outlaw regime and its supporters.

Another world-class criminal, Lenoid Menin of an important Russian organized crime
family, also set up shop in Monrovia, buying diamonds and exploiting timber.
Protected by the Taylor's son Chuckie, Menin also delivered weapons in exchange for
the chance to reap millions of dollars in illegal profits. Despite an international
arrest warrant, Bout lives peacefully in Moscow. Menin also remains free.

Terrorists and criminals chose their commodity well. Diamonds, like tanzanite and
other gemstones, carry a high value in small bulk, yet are easily convertible to cash
in an industry that is largely willing to ignore the origin of the stone. The stones
cannot be detected by dogs and set off no metal detectors at airports, making them
easy to transport. Sales of small amounts are impossible to detect on the world
market. They cause no undue fluctuations. For years, Bah and others had made
extensive use of grey market networks in Antwerp and elsewhere to sell millions of
dollars worth of diamonds, with part of the proceeds going to personal enrichment and
part going to keep the RUF and Taylor armed and at war.

By early 2001, al Qaeda was moving more aggressively into the diamond trade with the
clear intent of putting their ../assets beyond the reach of international investigators.
Two top al Qaeda operatives who were believed to have been heavily involved in the
U.S. embassy bombings and other high profile attacks--Ahmed Khalfan Ghailani and
Fazul Abdullah Mohammed--were dispatched to Monrovia to set up greatly expedited
mining operations, offering to buy all the diamonds the RUF could produce. They lived
in a safe house tucked between buildings housing Libyan diplomats and security forces
in downtown Monrovia.

In this effort, al Qaeda leaders, while devoutly Sunni Muslims, showed their
willingness and ability to work across religious divides. In order to move the
diamonds quickly, the al Qaeda operatives turned to Aziz Nassour, a Lebanese diamond
merchant with decades of experience in the blood diamond trade. Nassour is a devout
Shi'ite Muslim and a supporter of Lebanon's Amal militia.

Nassour, who was a close business associate of Mobuto Sese Seko in the former Zaire
and owner of a host of diamond companies in Antwerp with overlapping directorates,
met with the RUF high command in Monrovia in July 2001, promising to buy all the
diamonds they could produce. The rebels promised to step up production to the
maximum.

Several factors contributed to the RUF being able to dig out the stones at
unprecedented levels. Since the RUF had driven most of the civilians out of the
diamond mining areas after taking over the region in 1997, production was limited to
what the rebels themselves could mine. But things were changing at the same time al
Qaeda was scrambling to acquire the stones.

Because a fragile U.N.-backed peace process was taking hold and the RUF was gradually
disarming, the rebels were able to move their cadres directly from the demobilization
camps to mining. And, because the war was winding down, miners who had stayed out of
the diamond-mining region for fear of the RUF poured into the area as U.N.
peacekeepers offered a modicum of security for their labor.

Nassour's monopoly also created a shortage among traditional RUF clients, one of the
tip-offs that something unusual was happening. Diamond buyers who normally bought
stones from the RUF were unable to buy diamonds during the summer of 2001 because
some unknown buyers were paying 10 percent to 15 percent more than the market rate.
They said that premium, being paid by their competitor, made it virtually impossible
for them to buy high quality stones. The lack of diamonds was severe enough to prompt
U.S. Ambassador Joseph Melrose to write a cable to Washington about it, although he
did not have an explanation for the unusual market happenings. The cable received no
response from headquarters.

At the same time, according to Belgian diamond experts, despite the fact that in the
summer of 2001 more diamonds were being mined than at any time in the past decade,
the stones didn't show up in Antwerp or any of the other world markets. That showed,
one investigator said, that "someone bought and is hoarding a large stock of
diamonds, worth many millions of dollars."

The paradigm shift in terrorist financing, although similar methods have been used
for decades by Hezbollah and other Middle Eastern groups, was missed entirely by
Western intelligence agencies. The CIA lost almost all of its operatives in West
Africa after the Cold War, leaving the agency with virtually no resources on the
ground. French and Belgian intelligence, active in their former colonies in West
Africa, knew of the Middle Eastern connection to diamond sales over the past two
decades--principally to Hezbollah and Amal militia supporters--but viewed them as
relatively harmless. In the 1980s, the Israelis, aware of the financial boon diamonds
provided to its enemies, sent in a large number of its own diamond dealers in an
attempt to cut into the trade. Remarkably, by the end of the 1990s, Israeli and known
Hezbollah and Amal dealers were doing business with each other across Africa.

Because of the lack of understanding of the terrorists' use of commodities, the U.S.
government, in the immediate aftermath of 9/11, did not look for terrorist funds
where they were hidden. The initial hunt for al Qaeda funds focused almost
exclusively on trying to freeze the few ../assets that remained in Western banks and
were traceable to terrorist funding. The initial reporting on terrorist ties to
gemstones, by me on diamonds and Bobby Block of the Wall Street Journal on tanzanite
in particular, were met initially with deep skepticism in the U.S. intelligence
community.

This largely continues today. Because it had such a limited understanding of al
Qaeda's financial structure before the Sept. 11 attacks, the government was slow to
recognize and begin to act on the host of non-traditional financial methods used by
terrorists. These include the use of charities, the hawala system of transferring
../assets and the vital role that gold plays for these groups. Some U.S. intelligence
agencies remain reluctant to acknowledge even the possibility that al Qaeda moved
significant ../assets into commodities, especially gem stones, despite the growing
evidence, beyond anecdotal evidence and eyewitness testimony to support the veracity
of the reporting. Much of the evidence has been uncovered by European law enforcement
and intelligence officials who have followed leads the U.S. has chosen not to. The
Swiss attorney general, in a recent interview, said it was now accepted, conventional
wisdom among European investigators and intelligence agencies that al Qaeda had put
most of its wealth, estimated by U.N. experts to be between $30 million and $300
million, into commodities for safekeeping.

The Belgians in particular have uncovered a wealth of information on the diamond
nexus to al Qaeda, flowing through Antwerp. Other eye witnesses, unavailable when I
did my initial reporting, have come forward to confirm the presence of the al Qaeda
operatives in Liberia and Sierra Leone. Most significantly, the United Nations-backed
Special Court for Sierra Leone has uncovered witnesses and other evidence that not
only corroborated my initial findings, but placed other senior al Qaeda operatives in
Monrovia at the same time. For reasons that remain unclear, U.S. officials have given
little importance to the findings.

The terrorist ties to the diamond and tanzanite trade were uncovered by reporters on
the ground in Africa. Given the lack of human resources the CIA and other
intelligence-gathering agencies have on the ground in West and Central Africa
particularly it is not at all surprising the activities were undetected. Perhaps more
than any other region, Africa was abandoned by U.S. intelligence services following
the Cold War, often leaving a single station chief to cover two or even three
countries with almost no support personnel.

Given the dearth of ../assets on the ground and the fact that so little of the illicit
trade is detectable through electronic intercepts or other high-tech tools, it seems
to me highly probable that similar transactions, by al Qaeda and other terrorist
groups have transpired in other countries. Countries across Africa, from the Central
African Republic to the Congo and Chad offer many of the same conditions that Liberia
and Sierra Leone have offered: the trappings of a state but in reality states rife
with corruption, coupled with an almost complete lack of investigative capabilities
and no tradition of confronting criminal elements.

There is strong anecdotal evidence that al Qaeda bought gems in Congo-Kinshasa and
Angola as well as Sierra Leone and Liberia. The DRC, with its host of different
armies dividing up the country for the purpose of looting, coupled with a long
history of a rapacious state and corruption, is long known to be a major financial
center for Hezbollah and other armed groups. Private armies control vast swaths of
the extensive nation, and neither the central government nor intelligence agencies
have any clear idea of what transpires outside of the capital. For example, there are
direct, twice-weekly flights from the diamond-mining center of Mbujy-Mayi in southern
DRC to Dubai. The flights pass through no customs regimen, file no flight manifests
and are uninspected on both ends of the flight. In Angola, Jonas Savimbi maintained
strong ties to Compaore in Burkina Faso and the corrupt dictatorship in Togo, often
using diamonds as a medium of exchange for weapons. The only serious investigations
into the activities and their possible ties to terrorist organizations have been
carried out by the United Nations panels of experts and a handful of private,
nongovernmental organizations. Neither the host states nor counter-terrorism bodies
from other countries have dedicated significant resources to unraveling the diamond
trade there. Until resources and attention are brought to bear in this area, al Qaeda
and other terrorist organizations will continue to use diamonds and other commodities
to finance their actions.